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Ask a Lawyer -- LLCs
LLC Question 165
Question:
I formed a New York LLC with my brother in 12/94 and purchased property the same day as formation. In September of 1995, he asked me to sign an operating agreement which, among other things, added 4 additional family members to the LLC. I refused to sign the agreement and he declared that my refusal constituted 'opting out of the LLC". Since that time, I have learned that the undeveloped real estate we purchased has since been subdivided and sold with the 'members' named in the Operating Agreement receiving their portion of the proceeds which was substantial. Did my refusal to sign the operating agreement constitute my withdrawal from the LLC as he maintains?
Response: No, I do not think your refusal to sign the operating agreement in 1995 constituted a withdrawal from the LLC; however, there may be a problem in enforcing your rights after so many years have lapsed. Refusal to agree to a proposed operating agreement or to the admittance of new members does not constitute withdraw by any legal standard I am aware of. If you wish to pursue the matter, please contact a local attorney with experience litigating commercial disputes as soon as possible.
Submitted: 01/25/2008; Lori, NJ
Response: 01/29/2008; JJR
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